Tata Motors will provide electric cars for Rs 11.2 lakh, which will be inclusive of GST and a comprehensive five-year warranty which is 25 per cent below the current retail price of a similar e-car with three-year warranty.

TATA Group chairman N Chandrasekaran on Monday exuded confidence that Tata Motors will make money from the government order for supplying 10,000 electric cars in which it had outbid arch rival Mahindra & Mahindra. Tata Motors had emerged as the lowest bidder for 10,000 electric cars. The company had quoted the lowest price of Rs 10.16 lakh exclusive of the GST.

"I have seen comments by Pawan (Goenka) and Anand (Mahindra) both of whom I deeply respect. But I want to tell you, we will make money,'' Chandrasekaran said on a TV news channel. Last week, Mahindra & Mahindra (M&M) had raised questions over the viability of the low price offered by Tata Motors for the tender and had said that the company would have to take a hard look at how it could justify participating in the next phase of the tender.

"We have been selling electric vehicles in the country for the last five years. We have an idea about the costing of various components. So we find it difficult to comprehend the pricing offered by the other bidder (Tata Motors),'' M&M Managing Director Pawan Goenka had said.

Tata Motors will provide electric cars for Rs 11.2 lakh, which will be inclusive of GST and a comprehensive five-year warranty which is 25 per cent below the current retail price of a similar e-car with three-year warranty. As per the tender, the vehicles in the first phase will have to be supplied by November 30, 2017.

However, Mahindra is comfortable with a price per car that is around Rs 2 lakh higher than that of Tata Motors as a result of which it is yet to decide whether to participate in the second round of the tender which will account for over 9,500 units. We were offered 50 per cent of the tender (500 cars) in the first phase but we opted for 30 per cent as we would be losing money since our product is about Rs 2.3 lakh more expensive than the other bidder (Tata Motors), Goenka had explained.

Mahindra had said that its e-Verito was much bigger in size with better features and it will seek suppliers views to ascertain if the price can be brought down. Goenka, however, had ruled out curtailing vehicle size and other features to bring down the cost. While Tata Motors will supply 250 cars in the first phase, M&M will supply 150 units.

The electric vehicles procured under the EESL tender will be used to replace by central government and its departments as a first step to going green by phasing out petrol and diesel cars over a 3 to 4-year period. The contract valued at Rs 1,120 crore is said to be the world's largest single electric vehicle procurement. Mahindra & Mahindra which already has two electric cars e2o and electric sedan Verito had lost the bid to Tata Motors electric Tigor.

Anand Mahindra, Chairman, Mahindra & Mahindra, tweeted, "Congratulations @TataMotors! A terrific price. Delighted the revolution in the EV market has begun. With more players, the market will expand." Mahindra had also reacted to the launch of Tesla Model 3 in the US with the tweet : "Time you got here Elon. You don't want to leave the whole market to Mahindra do you? The more the merrier," was Anand Mahindra's light hearted banter.